1. What are the supply chainobjectives of Zara?Flexibility: Zara selects more thanone suppliers to guarantee that the company could not absence items inemergency conditions, like policies, disasters, and cultural differences. Dependability: Zara regulates thatretailers only can place order twice weekly, on Wednesday and Saturday. Ifretailers miss the deadline, they have to wait for at least three days. Order fulfillmenthas the same rules with retailers, including when items load on trucks, when trucksdeliver goods to the airport, and so on.Speed: From designing toproduction, from production to delivery, and from delivery to customers, Zaraonly need 15 days. Designer, procurement expertise, and production planners communicatearound a circle table to improve the work efficiency.
The enterprise improvesspeed by decline capacity utilization. In addition, in fashion field, productsare short life, but Zara obtains information quickly and responses swiftly.Costs: The purpose of Zara implementsall off those strategies is decrease costs and risks. For example, using informationtracking tools to decrease the bullwhip effect, regulating rules for purchaseitems to measure dependability, and selecting multiple suppliers to decrease risks.The company also purchases low costs raw materials to decrease costs andimprove profits.Innovation: The company implementssome supply chain strategies which are different with other rivals, like smallpart of tasks outsource to 3PLs, small batches, power control, strict rules toplace orders, and encouraging stock-outs.
Quality: One of the reason of thehigh market rates of Zara is high quality products. Except the stock out strategy,because of high quality products, customers visit Zara stores more often thanvisit other stores like H&M.Sustainability: Zara integrates andconsiders all off the supply chain processes, rather than only one or twoprocesses.
So, the company considers the whole environment of supply chain andpromote the sustainability. The firm has a self-reinforcing system, includingclose the communication loop, stick to a rhythm across the whole supply chain,and utilize capital assets to increase chain flexibility.2.
How is Zara’s supply chaindifferent from most other supply chains in their industry?First, Zara outsources small partof tasks to other expertise enterprises, and keep improve core competencies.Charging core competencies can improve the control power of the company.Second, Zara prefers to pack smallbatches to improve flexibility, and the company allows occasional stock out topromote customers’ desire to purchase commodities.
Third, the fashion company launchesa strict time-table to complete each process. The company learned just-in-timestrategy from Toyota.Fourth, Zara sticks tags on productsbefore they are delivered to improve efficiency. Finally, the firm permitsoccasional stock-outs.3.
Howdoes Zara control the bullwhip effect?The company hasthree parallel commodities lines, each line managed by one manager. Managers guaranteeinformation can flow quickly across the line. The enterprise applies theinformation technology to promote information exchanges. Technology includesPDAs regular phone.
When the season has started, Zara also permits retailersadjust 40% to 50% to change orders rather than only 20% to avoid overproduction.
